What happened this week around blockchain and cryptocurrencies? The most relevant local and international events as well as appealing background reports in a pointed and compact weekly review.
Selected articles of the week:
The collapse of several US banks and the Swiss Credit Suisse has shaken the entire financial world. Political decision-makers acted quickly to prevent a more comprehensive crisis, using expensive injections of liquidity and selective rescue actions by central banks to control the banking crisis from escalating. The recent price developments in financial markets suggest that some market participants do not trust the situation. Bitcoin, along with physical gold, has had some of its best weeks, which can be attributed to the current banking crisis. Finally, as a decentralized, inflation-resistant, and non-confiscatable asset, Bitcoin is an attractive alternative for suspicious investors.
As the traditional banking system wavers, the decentralized Bitcoin narrative and its associated self-governance is gaining momentum.
This week, Coinbase, the largest US crypto exchange, received a “Wells Notice” from the Securities and Exchange Commission (SEC). With a Wells Notice, SEC staff informs a company that they recommend the enforcement agency initiate enforcement action for possible violations of securities laws. It is not a formal charge or court proceeding but typically leads to one. The SEC’s Wells Notice questions specific services: some tradable cryptocurrencies, Coinbase Earn, Coinbase Prime, and the Coinbase Wallet. In response, the crypto exchange issued its own statement, expressing frustration. According to Coinbase, the SEC contacted the company last summer to discuss the possibility of registering a portion of its business with the SEC. Although Coinbase quickly agreed and proposed two registration models, spent millions of dollars on legal support, and repeatedly asked the SEC for feedback, the crypto exchange never received a response. The day before the final meeting, the SEC canceled and informed Coinbase that it would return to an enforcement investigation, a bizarre and questionable behavior by the regulatory agency.
Coinbase’s lobbying efforts do not seem to be very successful, as the SEC wants to bypass laborious debates and regulate through rigorous enforcement.
Stablecoins are digital currencies designed to maintain a stable value against a specific asset, such as the US dollar. As of December last year, three serious players shared the $133 billion market: Tether (USDT), Circle (USDC), and Binance/Paxos (BUSD). However, within a few months since the FTX debacle, $22 billion flowed out of the two Tether competitors and partially back to the original provider. The tightening of the US regulatory environment and a brewing banking crisis made it difficult for alternative providers to conduct their business. What remains as the most dominant stablecoin issuer is a controversial provider without disclosed bank connections and reserve audits from a “Big Four” auditor.
The once competitive stablecoin sector is once again centralizing in the hands of a single controversial issuer: Tether.
Plan B is a joint initiative of the city of Lugano and Tether to accelerate the use of Bitcoin technology. As part of the cooperation, a range of services for both businesses and consumers are being made easier. Over 150 stores, such as McDonald’s, already accept various cryptocurrencies as part of the initiative. In collaboration with the Guess boutique, Lugano’s solutions are now being expanded to high-fashion retail. The position of the Ticino city as a crypto hub is strengthening.
Residents of the Ticino city of Lugano can now use Bitcoin, Tether and LVGA to pay for their items at the Guess fashion chain.
Additionally: Bitcoin ATMs are devices that allow individuals to buy or sell Bitcoin with cash or credit/debit cards. These ATMs offer users a way to access Bitcoin and use the cryptocurrency without needing a bank account or a central exchange. The machines are often purchased and operated by independent individuals, with General Bytes being the largest manufacturer. However, the Bitcoin ATM manufacturer succumbed to a significant security vulnerability. As a result, Bitcoin ATM operators lost $1.5 million in digital assets. The incident should be a wake-up call for the industry to take security seriously and invest in robust precautions.
Hackers gained access to bitcoin ATM operator General Bytes’ cloud and users’ accounts through an insecure interface.
